One major element of estate planning in Florida is to attempt to limit the liabilities that your estate may face upon your death. After spending much of your adult life accruing assets in order to pass on to your beneficiaries, you no doubt want to ensure that as much of that wealth as possible remains available to benefit them.
Yet like many of those that come to us here at The Law Office of Nicole C. Morris, P.A., you may assume that there is no way to avoid estate taxes. Yet that may not be the case; indeed, there are ways in which you can limit (or even avoid) any tax liability.
Reviewing estate tax exemptions
Florida does not impose an estate tax on its residents, meaning that the only potential tax liability you need to concern yourself with comes from the federal level. The federal government offers the chance for your estate to avoid facing a tax liability through tax exemptions. Per the Internal Revenue Service, the federal estate tax exemption for 2020 is $11.58 million (it increases to $11.7 million in 2021).
Explaining estate tax portability
The federal government also allows for estate tax portability, which allows you to share your estate tax benefits with your spouse. Specifically, your spouse can claim the unused portion of your estate tax exemption. Through careful planning, you may be able to preserve your entire exemption to pass on to them.
If you leave your entire estate to your spouse upon your death, those assets pass on tax-free due to the unlimited marital deduction. This preserves your estate tax exemption, which your spouse can then claim to effectively double their exemption to $23.16 million.
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